ATC seeks to sell majority a stake, open to 100% sale and exit India

ATC, the US tower company is said to have re-engaged with Canada's Brookfield, which is considering a full buyout, people privy to the matter said

After its recent attempts to sell a 50 per cent stake failed to attract any interested parties, American Tower Corp (ATC) is now willing to sell a majority stake in its wholly owned Indian unit or even to offer up to 100 per cent ownership and leave the country, The Economic Times (ET) reports.

People privy to the matter told ET that the US tower company is said to have re-engaged with Canada's Brookfield, which is considering a full buyout.

It also had separate discussions with US infrastructure fund Stonepeak Partners and reached out to Macquarie and KKR & Co through its advisors. They added that the discussions with the latter two are believed to have been lukewarm.

Stonepeak has a stake in ATC's data-centre business in the US. However, the New York-based fund, which manages $55 billion in assets, has no presence in India. 

Stonepeak has invested in wireless infrastructure projects, but it is still unclear whether the firm is looking for a full 100 per cent acquisition or just a majority stake.

Meanwhile, ATC's discussions with Brookfield, which already owns Summit Digitel (that houses the telecom towers acquired from Reliance Jio), are said to be proceeding. Brookfield is only interested in acquiring ATC Telecom Infrastructure (ATC TIPL), but valuations are still a sticking point between the two.

According to senior executives, lawyers and consultants familiar with the discussions, ATC is seeking more than $4 billion enterprise value for its Indian unit. On the other hand, the suitors are unwilling to pay any control premium and are negotiating for a $2.8-3.0 billion valuation. 

They are concerned about the long-term viability of the tenancy revenue inflows, given the ongoing financial struggles of Vodafone Idea (Vi), ATC's biggest customer in India, they said.

ATC's change in plan

Initial plans by ATC to sell a 50 per cent stake in its Indian subsidiary suggested joint control with a prospective equal partner. However, the US tower company seems to have changed its strategy due to lukewarm buyer interest.

'ATC is unwilling to price its India towers below $50,000 apiece. Meanwhile a potential buyer like Brookfield is not really sure if it can recover its money from those towers through steady tenancy revenues in the face of key customer Vi's grim financials,' one of the people cited was quoted as saying by ET.

He added that valuations were the sticking point in the discussions, as any bulk acquisition of tower assets without guaranteeing long-term tenancy revenue would increase costs for a potential buyer.